Understanding The Major Currency Pairs And How To Trade Them

<p style&equals;"text-align&colon; justify&semi;">There are many interesting factors that distinguish the global <a href&equals;"https&colon;&sol;&sol;newsforpublic&period;com&sol;learning-trade-gap-forex-market&sol;">forex market<&sol;a>&comma; from its immense daily trading volumes to the fact that it&&num;8217&semi;s open 24 hours a day &lpar;and for six days each week&rpar;&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Interestingly&comma; the forex market also <a href&equals;"https&colon;&sol;&sol;www&period;compareforexbrokers&period;com&sol;forex-trading&sol;statistics&sol;" target&equals;"&lowbar;blank" rel&equals;"noopener">comprises more than 170 global currencies<&sol;a>&comma; from major assets such as the US Dollar &lpar;USD&rpar; and the Pound sterling &lpar;GBP&rpar; to minor and exotic options like the Thai Baht &lpar;TBH&rpar;&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In this post&comma; we’ll explore currency pairs in further detail&comma; while asking how you can trade them on the foreign exchange&period;<&sol;p>&NewLine;<h2>What is a Currency Pair&quest;<&sol;h2>&NewLine;<hr &sol;>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In simple terms&comma; a currency pair is the quotation of two different currencies&comma; with the value of the first &lpar;the base currency&rpar; quoted directly against the other &lpar;the quote currency&rpar;&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">This calculation is based on fluctuating&comma; real-time exchange rates&comma; which partially explains why the forex market boasts such high levels of volatility&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">This rate indicates how much of the quote currency is required to purchase a single unit of the base currency&comma; while all assets of this type are identified by a three-letter ISO currency code that allows for rapid recognition in the marketplace&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Due to the ease with which currencies can be bought and sold&comma; the forex market is also renowned for its high levels of liquidity&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">The high-volume EUR&sol;USD currency pair is currently considered to be the most liquid asset of its type in the current marketplace&comma; for example&comma; with the USD&sol;JPY also highly popular as a result of its relative predictability and stability&period;<&sol;p>&NewLine;<h2>How to Trade Currency Pairs<&sol;h2>&NewLine;<hr &sol;>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Generally&comma; currency pairs are traded as derivatives&comma; with this offering considerable flexibility to investors during times of increased or sustained volatility&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">When an order is placed for a currency pair&comma; the base currency is bought while the quote currency is sold&period; However&comma; investors don’t need to assume direct ownership on the underlying asset&comma; as they can instead speculate on the trajectory of currency pairs and profit even in a depreciating market&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In terms of selecting viable trading pairs&comma; you’ll first need to recognise that not all currency pairs move in a similar fashion&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Some spend the majority of their time trading within narrow ranges&comma; for example&comma; whereas others tend to move in strong and clearly-defined trends&period; Major pairings like the aforementioned USD&sol;JPY or the GBP&sol;EUR offer examples of the former&comma; while minor alternatives such as the GBP&sol;AUD <a href&equals;"https&colon;&sol;&sol;fxssi&period;com&sol;most-volatile-currency-pairs" target&equals;"&lowbar;blank" rel&equals;"noopener">fluctuate more wildly thanks to their increased volatility<&sol;a>&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">You’ll need to <a href&equals;"https&colon;&sol;&sol;www&period;fxopen&period;com&sol;en-gb&sol;" target&equals;"&lowbar;blank" rel&equals;"noopener">use reputable brokers to track and monitor these trends<&sol;a> in real-time&comma; particularly when trading more volatile pairs&period; When starting out&comma; however&comma; we’d recommend starting small with a couple of major currency pairs&comma; which are more predictable and easier to predict over time&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">However&comma; more experienced traders who base their strategy on moving average will benefit most from a currency pair that moves in strong trends&comma; making minor assets that feature commodity-driven economies the most appealing&period;<&sol;p>&NewLine;